Grand Hotel Childers Enterprise Agreement 2010
[2011] FWA 3076
•1 JUNE 2011
[2011] FWA 3076
The attached document replaces the document previously issued with the above code on 1 June 2011.
The document has been edited to correct a typographical error in paragraph [51] by replacing the reference to “paragraph 11 of this decision” with “paragraph 10 of this decision”.
Laura Fitzpatrick
Relief Associate to Commissioner Simpson
Dated 7 June 2011
[2011] FWA 3076 |
|
INTERIM DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Intapubs Pty Ltd T/A Grand Hotel Childers
(AG2010/13614)
COMMISSIONER SIMPSON | BRISBANE, 1 JUNE 2011 |
Grand Hotel Childers Enterprise Agreement 2010.
[1] An application was lodged by BCI Lawyers Pty Ltd on behalf of Intapubs Pty Ltd on 18 August 2010 for approval of the Grand Hotel Childers Enterprise Agreement 2010 (the Agreement).
[2] The Application was signed by Ms Pam Corliss on the Form F16 and accompanied by a Form F17 ‘Declaration in Support’ declared by Ms Corliss. In answer to question 3.4 in the Form F17 filed regarding less beneficial terms it was stated that clause 11 of the Agreement allowed for the working of additional voluntary hours to be paid at single time. In answer to question 3.5 regarding more beneficial terms it was stated that the base hourly rate under the Agreement was higher than the Award.
[3] Clause 5 of the Agreement states that the Agreement is to be read in conjunction with the Hospitality Industry (General) Award 2010 as varied from time to time. The Award shall apply where this Agreement silent. In the event of any inconsistency between this Agreement and the Award, the terms of the Agreement shall apply.
[4] The Agreement is to cover 7 employees, the majority being classified as Senior Casual Bar Attendants and paid at level 3 in the classification structure because of a requirement to operate TAB facilities.
[5] On 4 October 2010 I wrote to the Applicant and the Applicant’s representative Mr Chris Mossman setting out issues that I requested be addressed prior to approving the Agreement. These issues included three matters listed below.
[6] Clause 9 ‘Senior Casual Bar Attendant Wages’provides a flat hourly rate of $20.71 for all hours of work inclusive of all penalty rates, disabilities or allowances.
[7] I requested the Applicant provide me with a representative period of work performed by a sample of bar attendant employees as if the proposed agreement did apply to those employees compared to what those same employees would receive under the Award.
[8] Clause 10 ‘Managers’ proposed that a manager will be paid an annual salary however the agreement did not specify what the annual salary will be. Further clause 10 did not provide for all of the arrangements that are provided for in regard to annual salary arrangements that are provided for in Clause 27 of the Hospitality Industry (General) Award 2010. On that basis I could not be sure that a manager employed under this proposed agreement would be better off overall when compared to the Award.
[9] Clause 11 ‘Hours of Work’provides for the working of voluntary additional hours at a ‘flat rate of pay’ which would otherwise attract overtime. The clause had a similar effect to a clause considered by the Full Bench decision in Bupa Care Services Pty Ltd 1 where it had been determined that such a clause did not meet the Better off Overall Test.
[10] I requested an undertaking from the Applicant that while the Agreement is in operation the Applicant will not refer to, rely on or apply clause 11.1.4 of the Agreement.
[11] Email correspondence to my Chambers was received on 13 October 2010 from the Applicant’s representative advising he was taking instructions on the matter and would revert back in the near future.
[12] My associate sent email correspondence to the Applicant’s representative on 2 December 2010 requesting a response as soon as possible. Mr Mossman responded apologising for the delay and advising a response would be sent as soon as possible.
[13] On 14 December 2010 correspondence was received from the Applicant’s representative but it did not address the request for a representative period of work of a Senior Casual Bar Attendant as requested.
[14] Mr Mossman indicated his client was prepared to give an undertaking to address my concerns regarding Clause 10 Managers. A draft of a proposed undertaking was subsequently provided.
[15] However in regard to Clause 11 Hours of Work it was argued on behalf of the Applicant that for reasons set out in the correspondence dated 14 December 2010 casual employees engaged under the Hospitality Industry (General) Award 2010 are not entitled to penalty rates when they perform work in excess of 38 hours per week. Therefore, as Clause 11.1.1 in the Agreement limits the working week for casuals to 37 hours within a spread of 7am to 7pm Monday to Friday this provides a significant advantage to casual employees.
[16] I listed the matter for hearing on 20 December 2010. I repeated my request for an undertaking to ensure that casuals under the agreement would receive the rates of pay for hours of work described in clause 32.1, 32.2 and 32.3 of the Hospitality Industry (General) Award 2010.
[17] The matter was adjourned on the basis that Mr Mossman would again seek instructions from his client on the undertaking I sought.
[18] My Associate sought advice from Mr Mossman on the response of his client on a number of occasions in early 2011. On 4 March 2011 an email from Mr Mossman was received seeking to make further submissions and to provide statements on the basis of an application pursuant to s. 189 of the Act.
[19] Email correspondence was received from Mr Mossman on behalf of the Applicant advising that the award transitional instrument nominated was incorrectly identified in the Form F17 as the Hotels, Resorts and Accommodation Industry Award - South East Queensland 2002 when it was in fact the Hospitality Industry - Accommodation, Hotels, Resorts and Gaming Award 1998.
[20] The email correspondence stated that this was directly relevant to the issue as to whether the agreement can be approved pursuant to s.189(2) and the calling of evidence was foreshadowed to demonstrate the impact of the transition to the Modern Award.
[21] Accompanying this email was separate correspondence from Mr Mossman, now of Macpherson Kelley Lawyers. This correspondence advised that the Applicant conceded the Agreement in its current form did not pass the Better off Overall Test.
[22] The correspondence addressed the meaning of s.189 including the meaning of the terms public interest and exceptional circumstances. The correspondence referred to a number of decisions regarding these issues and argument as to why the Agreement could be approved.
[23] The correspondence advised eight statements were being prepared by the director of the employer and from employees. Further the profit and loss statement demonstrating the impact of penalties would be provided with documentary evidence of the financial position of the company.
[24] Copies of four statements signed and dated 18 March 2011 were subsequently received from Pam Corliss the Director of Intapubs Pty Ltd, Kimberley Bartley, K de Rooy Dunne and Tiffany Sondergeld all casual employees who work at the Grand Childers Hotel.
[25] The statement of Pam Corliss stated that the Hospitality Industry - Accommodation, Hotels, Resorts and Gaming Award 1998 did not require the payment of penalties rates for casuals for weekend work or evening work however the Modern Award does. It was also said the Applicant cannot afford to pay these penalty rates to casuals.
[26] Further that the only solution in the absence of approving the Agreement was for her husband and herself to work at the hotel exclusively on weekends.
[27] The statements of the other three witnesses all said they worked on average 20 to 30 hours a week, many of those hours in the evening or weekends.
[28] All three statements said a reduction in hours would impact on their ability to meet financial commitments.
[29] I relisted the matter on 30 March 2011. At the hearing Mr Mossman advised that the Applicant wished to place financial records before Fair Work Australia however needed more time to present this evidence.
[30] Mr Mossman pressed an argument that clause 19 of the Hospitality Industry - Accommodation, Hotels, Resorts and Gaming Award 1998 exempted casuals from receiving weekend penalty rates. I referred Mr Mossman to clause 15.2.2 of that Award which sets out in detail the entitlements of casuals to weekend penalty rates which are in effect, the same as the entitlements for casuals under the Hospitality Industry (General) Award 2010.
[31] Mr Mossman then pursued an argument that the Saturday loading of 125% under the Hospitality Industry - Accommodation, Hotels, Resorts and Gaming Award 1998 was the ordinary rate for a casual employee. I then directed the Applicant to the last sentence in clause 15.2.2 which says;
“This paragraph provides for penalty rates for casual employees in addition to the standard casual loading.”
Clause 15.2.2(b) Saturdays, says as follows;
“For work on Saturday, 25% of the basic periodic rate of pay for the class of work performed.”
This makes clear that the calculation is 25% in addition to the 25% standard casual loading.
It is clear that the rate of pay for a level three employee under the pay scale derived from the Hospitality Industry - Accommodation, Hotels, Resorts and Gaming Award 1998 is aligned to the rate of pay for a level 3 under the Modern Award and as a result no adjustment is required through the Schedule A - transitional provisions in this case.
[32] On 20 April the Applicant filed a further submission setting out eleven grounds to argue for approval of the Agreement on the grounds of exceptional circumstances and public interest factors. I conducted a further hearing on 27 April 2011 where the Applicant was represented by Mr Gifford of MacPherson Kelley Lawyers. No evidence regarding the financial position of the Applicant was tendered, and the Applicant was unable to produce signed and dated statements for the four further statements filed on 20 April 2011. I agreed to provide a further three days extension for the filing of signed statements. Signed copies of these further statements have not been filed.
[33] The first ground relied upon in the submissions of the Applicant for approval in accordance with s.189 were that the Agreement will permit employees who elect to work voluntary extra hours to earn more as no hours will be available for weekend or evening work. In rejecting a similar argument in Springfield Gourmet Pty Ltd 2Senior Deputy President Richards said as follows;
What I do know from the evidence as led is that there is labour price competition between casual and permanent employees for this particular employer.
Further, I have no information that the employer’s financial position is in some manner distressed, such that it requires relief from its labour costs to retain profit to ensure its viability or to build turnover for an interim period. No commercial or financial information has been put before me at all. Then financial circumstances of the employer cannot ground a claim of there being exceptional circumstances for the purposes of s.189 (2) of the Act.
[34] And further in the same decision;
“Indeed, there may be a countervailing argument that the arrangements envisaged in the Agreement may have an equally disadvantageous effect on permanent full time or permanent part time employees.
I make the observation, finally, that to accede to the application might merely have the result of providing a labour cost advantage to one employer in the industry and not others, despite their being no discernable “exceptional circumstances” that differentiates them..”
[35] For similar reasons to those set out above I do not believe I should exercise power under s.189 to approve an agreement because the applicant wishes to engage casual labour at substantially lower rates then other employers in the industry on the grounds that if the Agreement is not approved they will choose to engage permanent labour in preference to casual labour.
[36] The second factor raised by the Applicant was that the Agreement would allow casuals to earn greater income to offset periods when their hours may be reduced. As there was no specific evidence led to substantiate the claim that significant fluctuations occur in the hours available to casual employees the Applicant cannot rely on this argument.
[37] The third factor the Applicant referred to was the effect of the clause in reducing the transaction costs arising from casual employees having to move to new employers to work additional hours. Again because no specific evidence was provided regarding the financial position of the Applicant to support its claim that it will be forced not to engage casual labour on weekends and evenings I do not have sufficient evidence to accept that this will in fact occur.
[38] The fourth factor in summary is that casual employees prefer to be able to work on weekends and evenings at single time and the Agreement accommodates that preference. In my view the preference of certain casual employees to forgo Award entitlements in order to maintain a competitive advantage over permanent labour of itself does not satisfy me of the existence of exceptional circumstances making the approval of the Agreement not contrary to the public interest.
[39] The fifth factor was to allow the parties to alleviate the detriment to employees caused by potential seasonal fluctuations in the required hours. I was referred to the decision of Deputy President Bartel in Top End Consulting Pty Ltd. 3
[40] The unsigned additional statements of Pam Corliss, Kimberey Bartley, Karen Lee De Rooy Dunne and Tiffany Sondergeld filed with the further submission filed on 20 April make reference to seasonal variation but do not describe what the variation is. The Applicant has not made out an argument that the existence of seasonal fluctuation is a basis for a finding that exceptional circumstances exist for that reason.
[41] The sixth factor related to the financial circumstances of the business. The Applicant referred to paragraph 8 of the statement of Pam Corliss dated 18 March 2011 and paragraph 11 of the unsigned and undated statement filed on 20 April 2011. An assertion has been made that the hotel would be unable to engage casuals on weekends or evenings and the only solution would be that Pam Corliss and her husband would perform the work exclusively on weekends.
[42] No specific evidence was provided regarding the financial impact of weekend and evening penalties for casuals on the profitability of the business. The Applicant’s accountant, Mr Smith, who the Applicant indicated would provide a statement and or be called to give evidence never did. The Applicant has never provided evidence that the ongoing viability of the business is threatened. I cannot find exceptional circumstances exist due to the financial position of the Applicant.
[43] The seventh factor raised was an increase in the job security of casuals if the Agreement was approved. I believe it would be contrary to the public interest to approve an Agreement with substantially lower rates of pay for casual labour then the Award provides based on the reason that doing so will increase the likelihood of casual labour being engaged as opposed to permanent full-time or part-time labour.
[44] Factor eight relies on the fact that the Applicant is a small business. The fact that the Applicant is a small business of itself is not a basis to support the claim that exceptional circumstances exist in this case.
[45] Factor nine referred to Childers being a very small town with a high degree of unemployment. Childers is a town with a population in the order or 1,300 people. There are a number of hotels, motels, shops, restaurants and food outlets in or around the town where similar weekend penalty arrangements to that found in the Hospitality Industry (General) Award 2010 would apply. There are many towns throughout regional Queensland with smaller populations then Childers. I see nothing exceptional about this particular hotel being required to pay penalty rates in accordance with the Award. My view on this matter is reinforced by the fact that the employer had previously been roped into the Hospitality Industry - Accommodation, Hotels, Resorts and Gaming Award 1998 which had effectively the same weekend penalty provisions as the Modern Award.
[46] The Applicant provided no specific evidence regarding unemployment figures in Childers as compared to other locations, or reasons for variations in employment levels in Childers as compared to other regions and therefore I can make no finding to support the Applicant’s case on that basis.
[47] The tenth factor relied upon by the Applicant was that the Agreement was approved unanimously. The F17 Employer Declaration states that the agreement covers 7 employees, all of whom voted to approve the Agreement. The fact that the ballot of 7 employees was carried unanimously does not constitute exceptional circumstances.
[48] The eleventh factor refers to statements made in the undated and unsigned statements filed on 20 April regarding difficulties in finding alternative employment. It was also said that it is likely alternative work would be at a lower rate of pay. As I have no specific evidence regarding these claims I am not persuaded by them that exceptional circumstances exist in this case on those grounds.
[49] The Applicant despite indicating otherwise did not provide any clear evidence to support a claim of financial difficulties to demonstrate that this agreement is part of a reasonable strategy to deal with a short term crisis in, or to assist in the revival of, the enterprise.
[50] Mr Mossman said at the hearing conducted on 30 March 2011,
“..On that very point, I would quite frankly concede that an assertion from the director of the company regarding the financial circumstances of the business would not be enough to satisfy you, Commissioner, which is why I wanted to introduce some further material from, presumably, the accountant which shows you the financial records and the impact that the provisions of the award will have in a small country town...”
[51] It follows that, in its present form I decline to approve the Agreement presented. I am prepared to provide one more opportunity for the Applicant to give the undertaking I previously sought as set out in paragraph 10 of this decision, along with the previous undertakings offered by the Applicant regarding clauses 9 and 10.
[52] In the event these undertakings are not provided by close of business Friday 10 June 2011 I intend to dismiss the Application.
COMMISSIONER
Hearing details:
Brisbane
27 April 2011
30 March 2011
20 December 2010
1 Bupa Care Services Pty Ltd [2010] FWAFB 276
2 Springfield Gourmet Pty Ltd [2010] FWA 8297
3 Top End Consulting Pty Ltd. [2010] FWA 6442
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